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Trading Blog Thursday (evening), December 29, 2022

12/29/2022

MARKETS UPDATE (9:30 pm EST)

Well, here we are with one trading day left before the New Year holiday week-end, and after slumping for most of the week, the broad stock market rallied strongly today. This could be from a sudden burst of holiday optimism or perhaps a reaction to positive jobless claims data released today, or both. We also got a bullish divergence signal in equities yesterday because the NASDAQ made a new weekly low, but the DOW and S&P 500 did not (yet), and we are also expecting a sub-cycle bottom either this week or next. Yesterday may have been it for the NASDAQ, and maybe Dec. 22 (last Thursday) was it for the DOW and S&P 500. To confirm a bottom, however, we need to see these indices close back above their 45-day moving averages, which is now resistance. The DOW tested that resistance today, but the S&P 500, and especially the NASDAQ, are still well below their 45-day moving averages. It's still possible for these indices to fall lower into next week - perhaps with another bullish divergence signal. Let's wait to see if at least the DOW and S&P 500 can close back above their 45-day averages before we consider going long.

Gold and silver are up just a bit today, but we still have a bearish divergence signal in effect from Tuesday when gold made a new weekly high and silver did not. Let's stay on the sidelines of these metals for now and see if they can fall lower into our target ranges for a sub-cycle correction in gold and a final medium-term cycle bottom in silver (see earlier blogs).

Crude oil couldn't close above $80 earlier this week, and prices are now falling again. In Tuesday's blog on crude I wrote:

"Our "lines in the sand" here are $80 and then $83.27. I would still like to see prices drop back to $70 or below over the next three weeks for a final cycle bottom to buy. But if crude can first break and close above those lines, we may have to go with the idea that a new bullish cycle started on Dec. 9."

Well, it's still too early to tell if prices will get back down to $70. There is some support around $75, so crude could bounce from there in another attempt to break above $80. We will stay on the sidelines until prices break one way or the other out of the "congestion zone" between $75 and $80.

Trading Blog Tuesday, December 27, 2022

12/27/2022

MARKETS UPDATE (9:00 pm EST)

We are still looking for a major sub-cycle bottom in the broad stock market that is due this week or next. Last Thursday's lows in the DOW and S&P 500 (32,573 and 3,764, respectively) may have been it as both those lows were well below the 45-day moving average. A rally now would not be out of the question because we still have another holiday coming up this week-end - New Year's Day, and equity markets traditionally like to rally into holidays. But we didn't get a "Santa Claus" rally this year, and today's trading - the first day after the Christmas holiday - is not looking very bullish. We could still see these indices push lower for that sub-cycle bottom this week or next. If we see one or two (but not all three) of our indices (DOW, S&P 500, NASDAQ) make a new weekly low this week or next, we will have a bullish divergence signal, and that could be a good spot to buy for a short-term and possibly steep rally into the new year. We will watch for that. We remain on the sidelines for now.

Gold is now in the 8th week of its current medium-term cycle that started with the low of $1617 on Nov. 3. Prices jumped to a new weekly (and monthly) high today ($1829) before backing off and closing close to the bottom of the day's range (bearish behavior). A sub-cycle correction was due last week and was probably bypassed, but another deeper one is due anytime now over the next three weeks. We could see prices dip into the next reversal zone specifically for gold and silver coming up Jan. 5 - 13. That "dip" should be at least 40% of the rise from the $1617 start of the cycle. If today is the high ($1829), then we want to see prices drop to $1744 or lower to the sub-cycle bottom. If prices push to new highs this week or next, we will have to adjust our target for any sub-cycle correction. Let's stay on the sidelines of gold as we wait for a deeper price correction and a possible spot to buy.

Unlike gold, silver did not make a new weekly high today, and that gives us a bearish divergence signal (until silver can break above last week's high of $24.27). This week begins the 17th week of silver's current medium-term cycle. That means the cycle is old and the final bottom is due anytime now over the next four weeks. But we still don't know if the final top has been reached yet. Last week I wrote:

"The question now is whether or not silver can shoot up to $30 before correcting down again to that final bottom which is due anytime over the next 5 weeks. It's possible, but that would be a very steep rise over a short period of time. I'm going to be cautious here and bet on another corrective drop to the final medium-term cycle bottom before hitting $30. That would give us a safer potential spot to buy."

All of this is still valid, and today's bearish divergence signal could mean that the a drop to the final low has started. A good target for the final bottom could be around $21 - $22. If silver does break to new highs, we may have to adjust that target upwards. Let's stay on the sidelines of silver for now.

In last Thursday's blog on crude oil I wrote:

"...prices are rising up to a strong resistance line at $80 (Feb. contract chart). A top and reversal back down could be imminent. Again, my preference here would be to see a reversal and prices move below $70 over the next few weeks. But if crude "breaks out" above $80 and can exceed the $83.27 high of Dec. 1, we will have to consider the possibility that a new medium-term cycle cycle started with that $70.31 low on Dec. 9. That could be very bullish because it would also be the start of a longer-term 3 year cycle."

Well, today crude prices pushed a bit above $80, but then closed slightly below. Our "lines in the sand" here are $80 and then $83.27. I would still like to see prices drop back to $70 or below over the next three weeks for a final cycle bottom to buy. But if crude can first break and close above those lines, we may have to go with the idea that a new bullish cycle started on Dec. 9. Let's stay on the sidelines until this market decides in which direction it wants to go

Trading Blog Monday, December 26, 2022

12/26/2022

MERRY CHRISTMAS AND HAPPY NEW YEAR TO ALL READERS

Trading Blog Thursday, December 22, 2022

12/22/2022

MARKETS UPDATE (10:00 pm EST)

The financial news today seemed to focus on billionaire investor David Tepper who, like Fed Chairman Jerome Powell a week ago, was dishing hawkish rhetoric on the economy as we move into the holidays. On the heels of yesterday's sharp surge in the broad stock market (based on upbeat economic data), Mr. Tepper publicly stated today that he was "leaning short" on stocks based on his expectation that the Fed and other central banks will continue tightening into 2023. It appears that his "humbug" comments may have thrown another wet blanket on a possible second attempt at a "Santa Claus" rally. The DOW was down about 600 points by early afternoon, but closed the day with a 350 point loss. The NASDAQ lost 233 points by the closing bell. Christmas is only one trading day away; however, we still have a little over a week until New Year's Day. If investors shrug off Tepper's comments over the next few days, holiday optimism could reassert itself, and we might still see a rally into the new year.

"Santa Claus" rally aside, our technical and cycle analysis had predicted the major sub-cycle correction in the broad stock market that we have seen this month. Yesterday's equity surge lifted only the DOW above its 45-day moving average (the S&P 500 and NASDAQ remained below their 45-day moving averages), and today it closed back below. It looks like this correction could be headed lower. As I stated in Tuesday's blog, I would like to see the DOW get closer to 32,000 in this sub-cycle correction. That may still happen. If we get that with a bullish divergence signal early next week, it could be a good short-term buying opportunity for a sharp rally into the new year. But note that we don't expect that next rally to exceed the all-time highs in ALL THREE indices (maybe just the DOW), and we still expect this market to resume its longer-term correction down shortly after this next rally (if we get it). We remain on the sidelines of the broad stock market.

Gold and silver prices dropped sharply today and may be headed closer to our target prices of $1720 - $ 1750 in gold and $22 in silver. We remain on the sidelines of both metals for now.

In Tuesday's blog on crude oil I wrote:

"We remain in a reversal zone specifically for crude through Friday. I would like to see prices drop below $70 by then for a possible bottom to buy. If prices rally instead, we might see a top in this reversal zone and a subsequent correction back down. If prices really take off now and rally past Friday into next week, it could mean that the low of $70.08 on Dec. 9 was the end of the old (Aug. 16) medium-term cycle and the start of a new one."

Well, tomorrow is Friday and prices are rising up to a strong resistance line at $80 (Feb. contract chart). A top and reversal back down could be imminent. Again, my preference here would be to see a reversal and prices move below $70 over the next few weeks. But if crude "breaks out" above $80 and can exceed the $83.27 high of Dec. 1, we will have to consider the possibility that a new medium-term cycle cycle started with that $70.31 low on Dec. 9. That could be very bullish because it would also be the start of a longer-term 3 year cycle.
For now, let's remain on the sidelines of this market.

Trading Blog Tuesday (evening), December 20, 2022

12/20/2022

MARKETS UPDATE (7:30 pm EST)

Federal Reserve Chairman Jerome Powell may have "scrooged" this year's "Santa Claus" rally with his hawkish tone at December's FOMC meeting (equities plummeted following his speech on Dec. 14), but the DOW and S&P 500 may now be finding support for another rally into the new year.

We were looking for a drop in the broad stock market to test or break below the 45-day moving average this week or next, and we are getting that now. All three of our market indices (DOW, S&P 500, NASDAQ) are well below their 45-day moving averages and could be stabilizing near some strong support levels. (The S&P 500 and NASDAQ are right at strong support lines at 3,800 and 10,500, respectively; however, the DOW needs to drop a bit more to get close to its strong support at 32,000). The bottom of this sub-cycle correction is due anytime now through the first week of January, but since we are so close to our target lows, it will likely be this week or next. It would be nice to see a bullish divergence signal at the bottom of this sub-cycle. We won't get that this week (unless the NASDAQ can break below it's Oct. 13 low of 10,092 - it is close), but it could happen next week if one or two indices (but not all three) make a new weekly low. I'm tempted to buy now, but I think at least the DOW could move lower before it bounces. Let's stay on the sidelines today and see if these indices can drop a bit more over the next few days. If they reverse and rally from here, we can buy when they close back above the 45-day moving averages.

Gold started a new medium-term cycle with its low of $1617 on November 3. From there it has rallied strongly, but a significant sub-cycle correction is now due no later than this week. Last week's drop to $1775 on Thursday could have been it as it briefly tested the 15-day moving average. But prices did not get into our target range of $1720 - $1750, so we did not buy. A rally towards $1900 may be starting now, but last week's corrective drop only lasted 2 days (a bit short). We could still see another corrective drop that might take us closer to our target and give us a better spot to buy. Let's stay on the sidelines of gold for now.

In last Wednesday's blog on silver I wrote:

"Silver's current medium-term cycle is much older than gold's. It started with the low of $17.59 on September 1 and is into its 15th week. Like gold, silver's general trend looks very bullish right now, but there are also some short-term bearish signals suggesting a corrective drop is imminent - possibly the final corrective drop to the final bottom of the current medium-term cycle (which is due anytime now over the next six weeks). A good target for this correction would be the strong support line around $22. If silver prices drop close to this price over the next several weeks, we may look to buy as the next medium-term cycle could rally as high as $30, and possibly a little more."

Silver did drop last week for three days but only tested the 15-day moving average, and prices did not get very close to our target of $22. It's highly unlikely that was the final medium-term cycle bottom. The question now is whether or not silver can shoot up to $30 before correcting down again to that final bottom which is due anytime over the next 5 weeks. It's possible, but that would be a very steep rise over a short period of time. I'm going to be cautious here and bet on another corrective drop to the final medium-term cycle bottom before hitting $30. That would give us a safer potential spot to buy. We remain on the sidelines of silver.

In last Thursday's update on crude oil I wrote:

"It's still not clear if the current medium-term cycle in crude started with crude's Aug. 16 low at $84.31 or with the Sept. 26 low at $74.98. The Aug. 16 labeling would make the cycle older than the Sept. 26 labeling, but we note that in both scenarios, the cycle has turned bearish."

This is still the case. We remain in a reversal zone specifically for crude through Friday. I would like to see prices drop below $70 by then for a possible bottom to buy. If prices rally instead, we might see a top in this reversal zone and a subsequent correction back down. If prices really take off now and rally past Friday into next week, it could mean that the low of $70.08 on Dec. 9 was the end of the old (Aug. 16) medium-term cycle and the start of a new one. As one can see, there are several possibilities here, so we will remain on the sidelines until cycle labeling becomes more clear. My preference at the moment is to see crude prices fall closer to $65 over the next few weeks for a potential spot to buy. The longer-term view of crude is till quite bullish.

Trading Blog Thursday, December 15, 2022

12/15/2022

CRUDE OIL UPDATE (3:00 pm EST)

In my last blog on crude oil (Dec. 5) I wrote:

"Crude may be forming a support line around $75, but if that breaks and prices move below last week's low of $73.60, we could see crude moving toward $65."

Well, that support line did break, and crude dropped to the $70 level last week.
On Nov. 22, I wrote:

"Last Friday, the Biden White House released a statement declaring its Administration would repurchase crude oil for the SPR (Strategic Petroleum Reserve) when prices get at or below $67 - $72 per barrel. If the Administration follows through with this plan, that price range could be a good spot to buy."

So we have also dropped into the Biden Administration's declared price range to repurchase crude for the SPR We note, however, that they specify "at or below" which means it could be under $67. Prices have risen sharply this week from last Friday's low near $70, so buying may have commenced. But let's consider our technical and cycle analysis before we act on trading advice from the White House.

It's still not clear if the current medium-term cycle in crude started with crude's Aug. 16 low at $84.31 or with the Sept. 26 low at $74.98. The Aug. 16 labeling would make the cycle older than the Sept. 26 labeling, but we note that in both scenarios, the cycle has turned bearish. Why? Because last week prices dropped to $70, and that is below the initial starting points in BOTH scenarios. When a cycle turns bearish, prices usually move lower until they reach the final bottom of the cycle. It's a little early for a final bottom in the younger (Sept. 26) cycle, but a final bottom in the older (Aug. 16) cycle could happen anytime now (it may have already happened with last Friday's $70 low).

We entered a new reversal zone specifically for crude this week (Dec. 13 - Dec. 22), and prices are rising sharply into it. This suggests an imminent top and reversal back down could happen this week or next. I'm going to take a bearish view here and go with the idea that prices could fall lower than $70 and closer to or even below $65 over the next several weeks. The last two weeks in December and the first week of January would be a good time frame for a significant bottom in crude, whether it be a younger or older cycle. Let's wait to see if prices can turn down again and move closer to our $65 target. If they do, we may have a good buying opportunity setting up soon.

Trading Blog Wednesday (late night), December 14, 2022

12/14/2022

COMMENT ON THE FED MEETING and UPDATE ON GOLD AND SILVER (11:30 pm EST)

At the end of this week's FOMC meeting today, the Fed announced another interest rate hike - this time raising rates by half a percentage point. Although this was less than the three quarter point hike in November, the Fed made clear that although it seems that inflation is slowing down, they plan to continue rate hikes into 2023 to achieve a range of 5% - 5.25% by the end of next year. This target is higher than the the 4.5% - 4.75% range previously suggested by the Fed, which shows that Fed Chairman Jerome Powell is not softening his hawkish stance.

The broad stock market plummeted at 2:00 on news of the Fed hike but then recovered a bit by the closing bell. It's hard to tell if this initially negative reaction to the Fed news will persist over the next few days, but we are expecting a significant corrective drop in this market, so we might get that. As I mentioned in yesterday's blog, a drop to the 45-day moving average in the DOW and S&P 500 would not be out of the question. Let's stay on the sidelines and wait to see if the correction goes lower.

We can now confirm that gold started a new medium-term cycle with its low of $1617 on November 3. This cycle seems to have a bullish trend, but it is due for a significant sub-cycle correction this week or next which should drop somewhere between the 15-day and 45-day moving averages (that would be $1781 and $1722, respectively, and rising). A good target range would be around $1720 - $1750. We may look to buy there as this cycle is still young and looks bullish and could rally up to $1900.

It's important to note here that gold is probably making a final wave up at the end of a long-term 23-year cycle due to bottom sometime around 2023 - 2025. In other words, the top of this rally (and probably the top of the current medium-term cycle) will be followed by the final wave down to the final bottom of the 23-year cycle in 2023 - 2025. That bottom could go as low as $1000. We may therefore have a very good shorting opportunity near the top of this next rally (as long as that top stays under $2000, and specially $2070 - the top of the current 23-year cycle).

Silver's current medium-term cycle is much older than gold's. It started with the low of $17.59 on September 1 and is into its 15th week. Like gold, silver's general trend looks very bullish right now, but there are also some short-term bearish signals suggesting a corrective drop is imminent - possibly the final corrective drop to the final bottom of the current medium-term cycle (which is due anytime now over the next six weeks). A good target for this correction would be the strong support line around $22. If silver prices drop close to this price over the next several weeks, we may look to buy as the next medium-term cycle could rally as high as $30, and possibly a little more.

For now, we will remain on the sidelines of both gold an silver as we watch for prices to move down to $1720 - $1750 (gold) and $22 (silver).

Trading Blog Tuesday (late night), December 13, 2022

12/13/2022

UPDATE ON THE BROAD STOCK MARKET (11:30 pm EST)

I am still holding to the idea that new medium-term cycles started in both the DOW and S&P 500 on October 13 (from lows at 28,661 and 3,491, respectively). This means that these indices are 9 weeks into their cycles, and a significant sub-cycle correction is due at any time now. Last week's drop to new lows on Tuesday may have been it; and indeed, those lows were in the center of a strong reversal zone. Both indices have rallied from there, and today both made new weekly highs. Is the correction over? Maybe, but not necessarily. There are other technical signs that suggest this market could fall lower. Is a "Santa Claus rally" back on? It's possible, but I'm not enthusiastic about buying this close to a holiday top, especially when a deep correction is due (overdue).over the next few weeks (unless it happened last week). An ideal corrective drop should at least test the 45-day moving average (last week's drop did not get that low). Right now, that would be around 32,700 (and rising) for the DOW, and 3,875 (and rising) in the S&P 500.

If these indices drop near those targets this week or next, we may look for a place to buy for another sharp rally up. But keep in mind that any rally that fails to exceed the all-time highs in the DOW and S&P 500 from January could set up a very strong short-selling opportunity that we will want to take advantage of as it could be the next serious wave down in a long-term broad stock market correction. Let's remain on the sidelines for now.

Trading Blog Tuesday, December 6, 2022

12/6/2022

Please see new updates to GOLD and the BROAD STOCK MARKET "CRASH" on the
Home Page.

Trading Blog Monday (late night), December 5, 2022

12/5/2022

MARKETS UPDATE (11:30 pm EST)

All three of our broad stock market indices (DOW, S&P 500, NASDAQ) were able to make new weekly highs last week, which negated our bearish divergence signal from earlier in the week. Nevertheless, a corrective drop seems to be proceeding from last Wednesday's and Thursday's highs as we approach the center of another strong general reversal zone (Dec. 1 - 9). Let's see how far this correction can go without the benefit of that bearish divergence. We may look for a buy spot if it drops lower into the end of the week as there is still a chance equities could stage a "Santa Claus rally" into the new year. Let's stay on the sidelines for now.

After making new weekly highs early in the day, both gold and silver prices took sharp declines and were significantly down by the closing bell. Today's highs were near the center of a reversal zone specifically for the precious metals (Nov. 28 - Dec. 9), so a significant corrective drop has likely started. As with the broad stock market, we may want to buy a sub-cycle correction soon (as long as it doesn't go to low) because both metals still look bullish (especially silver) and could rally some more. For now, we remain on the sidelines of both metals.

Crude oil prices also seem to be dropping into our general reversal zone from an $83.34 (Jan. contract chart) high on Dec. 1. Crude may be forming a support line around $75, but if that breaks and prices move below last week's low of $73.60, we could see crude moving toward $65. In my blog on Nov. 22, I wrote:

"Last Friday, the Biden White House released a statement declaring its Administration would repurchase crude oil for the SPR (Strategic Petroleum Reserve) when prices get at or below $67 - $72 per barrel. If the Administration follows through with this plan, that price range could be a good spot to buy. As mentioned above, if crude turns bearish and breaks below $74.96, we could see prices fall quickly into Biden's price range,"

We are still interested in possibly buying if crude can fall into that $67 - $72 price area. That could happen this week or even next week as we enter another reversal zone for crude Dec. 13 - 22. We will stay on the sidelines for now.

MERRY CHRISTMAS AND HAPPY NEW YEAR TO ALL READERS​

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MERRY CHRISTMAS AND HAPPY NEW YEAR TO ALL READERS